Decisions Facing Rachel Reeves on Friday 8th May 2015 (14: Is DWP Fraud Washing Its Face?) #GE2015

Number 14: Is DWP Fraud Washing Its Face?

A good few years ago now, I attended a briefing being delivered by Marks and Spencer. I was working alongside colleagues helping to fill vacancies at stores opening at the (then) new Fort Retail Park. A manager had come along from M&S to tell us about her company and their recruitment methods.

We found the presentation useful and detailed enough that we had few questions. However, the manager had referred to something called shrinkage. A colleague asked what this meant. The manager described shrinkage to us as a retail sector euphemism for theft by customers and staff. My colleague became rather agitated when she realised that during the presentation she had been told that M&S tolerated shrinkage of up to 5% at store level! Only if it went over 5% would M&S send in the heavy mob. Businesses tend to lose shrinkage in their bad debt provision.

DWP, even today, cannot get social security fraud above 0.5% of the total budget. Now the public sector is always being told to be more like the private sector so should DWP disband its fraud teams? Perhaps the staff should join Her Majesty’s Revenue and Customs to investigate tax fraud? Certainly, there is an argument for scaling back DWP’s fraud staff as the savings they claim as a result of their activities are mostly notional.

However, as it would be politically risky to disband DWP’s fraud teams, perhaps they might concentrate their efforts on tackling collusive employers and professional criminals, instead of expending a lot of effort on the small fry?

A collusive employer is one who knows someone is committing social security fraud and, partly employs them for that reason. They may well allow an individual time in which to sign on and help them work around other requirements placed upon them by the Jobcentre. An employer willing to collude is more than likely to be committing tax fraud, not complying with Health and Safety legislation, not paying the National Minimum Wage and so on. A DWP crackdown on collusive employers would arguably be of greater benefit to taxpayers than its current operations.

There are organised and not so organised criminals who are using social security payments as capital for their activities. We had a gang within a stone’s throw of the Jobcentre where I worked. They were to our knowledge, working and signing, running a ‘chop’ shop; drugs dealing and engaging into anti-social behaviour (and not just in the Jobcentre). They knew we knew and they knew we knew that they knew, as did the police, Trading Standards, Inland Revenue … No one would do anything unless they were confident that they could charge the gang and put them away. I contend that tackling this sort of fraud would be a better return on the taxpayer’s investment in DWP’s fraud teams than its current activities.